By DON McINTOSH, Associate Editor
The U.S. Labor Department is investigating prevailing wage violations at four Portland-area construction projects that received loan guarantees from the U.S. Department of Housing and Urban Development (HUD). That government help came with conditions: The apartments must be affordable for moderate-income families or the elderly or handicapped, and construction workers must be paid local prevailing wage rates as determined by government surveys.
But an investigation by Painters District Council 5 found that a painting subcontractor at the Parker Apartments construction project paid workers as little as half the amount they were entitled to. Workers who complained about the violation were let go.
The story begins in March, when Painters union organizer Roman Ramos asked out-of-work union member Marcos Jimenez to go undercover as a painter at the Parker Apartments — a six-story 177-unit apartment building under construction in the Pearl District — and report back any illegal practices he found.
The Parker is named after the toddler son of Bob Ball, a prominent developer who considered a run for Portland mayor in 2007. To build it, Ball obtained a $35.7 million loan from CBRE, the world’s largest commercial real estate services firm — backed by a HUD loan guarantee.
The government doesn’t want to be a party to a race to the bottom.” — Labor Department investigator Rebecca Clark
“Every project we’ve looked at in Washington and Oregon has had issues,” Kelley said. And the biggest issue has been violations of the prevailing wage law, known as Davis-Bacon.
Davis-Bacon is meant to level the playing field on taxpayer-funded construction projects, explains Rebecca Clark, regional enforcement coordinator for the U.S. Department of Labor.
“It’s in place so that unscrupulous contractors can’t come in and underbid,” Clark said. “The government doesn’t want to be a party to a race to the bottom.”
No rate, and no hours
It didn’t take Marcos long to find problems at C2 Professional Painting, the painting subcontractor at the Parker Apartments. Showing up at the job site March 20, 2014, he was told by C2’s foreman that he could start work the next day. But he was never told what the rate of pay would be. His first paycheck worked out to roughly half the $26.83 an hour prevailing wage rate for painters. Not only that, but he never saw or signed a W-4, the form that determines income tax withholding. Paychecks came late, and without a proper pay stub — which would show the hourly rate and number of hours worked. Marcos stayed on at The Parker until May 6, when he was laid off after an argument with the foreman. But he stayed in touch with other members of the C2 crew.
Even the guys picking up garbage on the floor were making more than us.” — Romeo Garcia
“Even the guys picking up garbage on the floor were making more than us,” recalls C2 painter Romeo Garcia.
The C2 painters began talking with other workers on the site. A Carpenters union member working as a drywall hanger at Anning-Johnson encouraged them to report the violation to the government and to general contractor Lorentz Bruun. On July 3, he accompanied several other workers to the project superintendent’s trailer, and they told Lorentz Bruun senior project manager Mike Clancy what was happening.
On prevailing wage jobs, contractors are required to fill out certified payroll reports every week, listing the names of the workers, the number of hours worked, the rate of their pay and benefits, and any payroll deductions. Willful falsification of the reports is subject to civil and criminal prosecution.
According to the workers, Clancy looked at C2’s certified payroll reports, and said their check amounts matched up, with C2 paying the $26.83 rate. Except for one problem: The reports said the men were working half-time, but the men said they were working full-time. Clancy told them he’d look into it.
Told to lie, workers stick together
By then, the Department of Labor was involved. A team of at least eight investigators flew in from around the country, led by Rebecca Clark. They pored through certified payroll records, and interviewed workers. Besides The Parker, they investigated three other Portland-area projects with HUD loan guarantees: The Prescott Apartments, Marquis at Tualatin, and Moreland Station Apartments. Results of the investigations are still pending.
Shortly after the visit to Lorentz Bruun, C2 workers say their supervisor, Felix, told them that if they didn’t go back and tell Lorentz Bruun (and later, the DOL investigators) that they were working only 20 hours a week and making more than $20 an hour, the company would go out of business. Garcia and one other worker refused, and were told to leave. Six other workers were then given a choice: Lie about the hours worked, and in the future be paid as a “professional painter,” or be fired like the other workers. They packed their things and left. They had already made a pact with each other that if any were let go, they’d all walk.
Having seen the records, DOL agents met with C2 workers on Aug. 1. It was clear the law had been violated.
Wage theft total: $85,000
Under the law, whoever signs the loan documents — in this case the developer — is on the hook for wage violations. But it never got to that level. On Sept. 16, general contractor Lorentz Bruun paid $85,000 to settle the claims.
“C2 totally screwed me,” Lorentz Bruun president Mark Bruun told the Labor Press.
Bruun said his company has never had a prevailing wage violation in 70 years of business. Lorentz Bruun employs some union subcontractors, including concrete contractor Whitaker Ellis.
C2 totally screwed me.” — Mark Bruun, president of Lorentz Bruun
C2 and New Heights are certified as a Women’s Business Enterprise (WBE) — a designation that makes it a more attractive bidder on public and private projects that track utilization of women and minority contractors. To be certified, a woman must own at least 51 percent of the company, be president or CEO, and be active in daily management.
In 2010, Errin Caudle ran unsuccessfully for Hillsboro City Council, promising to eliminate “needless government regulation and intervention.” “As an owner of a small business, I understand the importance of fiscal accountability through honest and transparent management practices,” she said on her now-defunct campaign web site.
The owners respond
Reached by phone, the Caudles gave contradictory explanations of what happened. Errin Caudle said she wasn’t in charge of the job at The Parker, and that her husband handled the project. Gordon, meanwhile, said the foreman was in charge of the project. Gordon Caudle said he was just the bookkeeper, never set foot on The Parker construction site until the DOL investigation, and never met most of his own employees. He alternately blamed the general contractor, his foreman, and his workers, for what happened.
“We put too much faith in Felix,” Gordon Caudle said. [Caudle also said he didn’t have Felix’ phone number on him, though he’d worked with him for seven years.]
Caudle said he paid at the prevailing wage rate for the number of hours listed on the time cards he received from Felix. At one point in the interview, Caudle implied that Felix might have falsified time cards in order to spread the work around. Caudle said Lorentz Bruun never once let him know that C2 guys were on the job for more hours than the certified payroll indicated. [Indeed, it’s part of a construction manager’s job to keep track of who’s on a job site and when.] Later, Caudle suggested the employees hadn’t really worked full-time, and didn’t complain until they were due to be laid off as the project was winding down. [C2 remained on the job until mid-September, Caudle said.] If this theory is to be believed, then eight semi-skilled immigrants from Mexico were savvy enough about U.S. law to convince a team of federal investigators to believe them over sworn certified payroll records kept by C2 and Lorentz Bruun.
Gordon Caudle said C2 was invited to bid on The Parker job by Lorentz Bruun, and hadn’t worked for them before. He said the contract was for about $300,000, to paint walls and doors in a 177-unit, 200,000 square foot building.
Bruun says his company will more carefully vet its subcontractors in the future. Should Lorentz Bruun have known C2 wouldn’t be able to do the project for what it was paid? Bruun said there were no red flags, and that C2 came in at within 10 percent of other bidders.
Pay up and move on: Is that the end?
It’s not clear yet whether the Department of Labor will pursue other sanctions against C2, like debarment from future government projects. Clark said that decision depends on the facts of each case and how egregious violations are. As of press time, C2 workers were still waiting to hear from the Department of Labor about the settlement.
“C2 stole money from us,” said Garcia. “It’s not right.”
The $85,000 settlement would cover the underpayment on the hours they worked, but it won’t compensate them for the wages they lost when they were terminated — or the emotional impact and stress of joblessness, of not knowing where they’d go next or how to support their families. All six workers interviewed for this story have found other work since leaving C2.
The Parker, meanwhile, held its grand opening Sept. 22. The HUD-assisted apartment project will fit right into Portland’s affluent Pearl District. It’s LEED Platinum Certified, with a workout facility, coffee bar, dog-washing area, a bicycle repair station and 180 bicycle stalls, and an underground parking garage with 181 parking spaces. Units have walk-in-closets and gourmet kitchens with custom cabinetry and Energy Star stainless steel appliances. Monthly rents range from $1,323 for a 497-square-foot one-bedroom apartment to $3,078 for a 1,097-square-foot two-bedroom.
As for the Caudles, they say they’re closing their business. “This economy is killing me,” Errin says. “It’s not worth it any more,” adds Gordon. They didn’t say what’s next for them, but state business records show Errin Caudle registered a medical marijuana dispensary in March, and there’s fresh paint at 9046 NE Sandy Boulevard, listed in a July 26 corporate filing as the principal business location for her new venture, Evergreen Medicinals.
[CORRECTIONS: An earlier version of this article said developer Robert Ball “ran for Portland mayor in 2008” and “teamed up” with Eugene developers Don Woolley and Tom Connor on the Parker project. Ball considered a run for Portland mayor in 2007, but was not formally a candidate. A spokesperson for Ball said Ball’s company Astor Pacific purchased the land from a company at which Woolley and Connor are the principal officers, but that Woolley and Connor were not otherwise involved in the project. Also, an earlier version of this article listed Prairie Electric as an example of a union subcontractor employed by Lorentz Bruun; Prairie is non-union.]